Unregulated Futures Market Costs Consumers

Congressional investigations into unregulated commodity exchanges point to a lack of oversight as a leading cause of high-energy prices for U.S consumers.

The federal Commodity Futures Trading Commission is charged with overseeing the commodities market, which trades such high-profile goods as natural gas, coffee and crude oil.

While trading volume has grown by a factor of six since energy companies lobbied Congress in 2000 to exempt energy markets from regulation, staffing levels and budget allocations for the CFTC are at the lowest level in its history, The Washington Post reports.

Sen. Carl Levin (D-Mich.) is amending a farm bill to include a requirement that unregulated commodities markets be monitored in the same fashion as the New York Mercantile Exchange.

The CFTC monitors NYMEX for fraudulent trading on the futures market and imposes limits on trader positions.

The congressional investigation spawned from trading associated with the hedge fund Amaranth that at one time controlled 70 percent of the natural gas commodities on NYMEX.

High-risk trades led to the funds’ collapse after losing an estimated $6 billion. Nationally totals are not available, but officials in Georgia estimate Amaranth’s collapse cost consumers an additional $18 million during the 2006-07 winter season.